SAP Plays On-Demand Field

PALO ALTO, CALIF. -- If further proof was needed that on-demand software
in the enterprise is growing, software giant SAP provided it today with the
unveiling of its first entry to the market.

SAP's on-demand solution is for
customer relationship management (CRM) and builds on the company's mySAP CRM
software, a more traditional "on-premises" software solution.

SAP has embraced the charge model of other Software as a Service (SaaS)
providers. The first offering in what is expected to be an expanded line of
on-demand CRM applications from SAP is a Sales module available for $75 per
month per user.

At a briefing presented simultaneously here and in New York, SAP explained
that long-time partner IBM would provide the hosting
services for SAP's on-demand offerings, as well as deploy its 5,600
CRM consultants to work with customers.

SAP is late to a market for hosted software applications
that put Salesforce.com on the radar, and others such as Siebel (now part of
Oracle) have entered aggressively.

But company execs here emphasized
innovations SAP is bringing to the table and its expertise in enterprise
software in general, as well as CRM in particular.

For example, SAP claims to offer the first hybrid CRM solution. In the company's "isolated-tenancy" model, customers have their own instances of the
software, which SAP says is more reliable than the approach of so-called
pure-play, on-demand software providers such as Salesforce.com, which has
suffered from complaints related to delays in accessibility.

The
next on-demand module planned for release in the next few months will be for
marketing.

In targeting the mid- to upper-end enterprise market customer with its
on-demand software, SAP hopes to reign in any of its substantial installed
base intrigued by competitive hosted solutions from Salesforce.com, Siebel
and others.

"We're focusing on CRM, because that's what our customers want,"
said CEO Bill McDermott, president and CEO of SAP Americas. McDermott said
SAP already has a 48 percent share of the CRM market. He also said the compensation
plan for SAP's sales force is "agnostic" as far as any benefit from selling
on-demand versus on-premise software.

"We will not push customers to go from on-demand to on-premise," said
McDermott. "We do think some will migrate to our full business suite, but
that will be their choice."

Mike Michlovich, an IT director at SAP customer Dupont, said his company
has been looking for ways to make information in its legacy systems more
accessible to marketing groups within the company. He said SAP's on-demand
solution fits the bill.

"We told them we can't afford a long roadmap, we
need something that's quick and inexpensive. SAP listened."

For customers, a key benefit of on-demand software is being able to get
the latest releases, upgrades and fixes quickly and transparently. But the
move to on-demand also represents a change for SAP, which can take 18 months
or more to release big, sophisticated updates to its software.

In addition
to updates on-the-fly as they're ready, SAP said it expects to release new
on-demand applications on a quarterly basis.

"This is very exciting and very different than how SAP operated in the
past, Ralph Von Sossen, a vice president in the CRM group at SAP, told
internetnews.com.

Mark Loutenbach, a general manager with IBM, which is providing the
computer and database hosting for the SAP offering, said CRM has been a top
priority among IBM's enterprise customers. He lauded SAP's solution for
being innovative with a flexible pricing path "so customers have value
commensurate with their investment."

CRM is SAP's target for on-demand for at least the near term.

"Manufacturing and accounting are applications company's would rather keep
inside the shop if their wire to the world is cut off because they can keep
rolling," said Shai Agassi, president of the product and development group
at SAP.